$1.2B Sovereign SpaceX Bet: Which Space Stocks to Buy and Avoid

Norway just dropped 1.2 billion on SpaceX and suddenly every space stock looks tempting. And to that I say, don't believe the hype. I analyze every stock in the group and exposed some ugly problems hiding behind all that hype. Gladly. Two stocks actually have the fundamentals to back up the excitement. I'll share it all with you today. Five space stocks to avoid like the plague, plus two stocks that you should consider buying right now. But first, I need to give you a little backstory on this big ticket investment. Now, Norway runs the largest sovereign wealth fund on the planet, worth about $2.3 trillion. They move slow, but when they move, they move big, and when they step into something new like this, people pay close attention. Now, on August 12th, they disclosed that $1.2 billion stake in SpaceX. And remember, SpaceX only went public in June. So, one of the most disciplined institutions in the world is backing up one of the most highly hyped and often ridiculed IPOs in history. The ridicule was on the valuation front where they were larger than Amazon all the while losing money hand over fist. All right, so back to the main point. The large investment put a big spite on the entire space exploration industry and that conversation has to start with the attractiveness or lack of attractiveness of SpaceX shares. And you know the symbol, right? But before we get too far along, I should introduce myself. I'm Steve Wrighter, but everyone calls me Riley. I've been investing for over 40 years and currently a partner at Wall Streetzen.com. That's where our quant rating system identifies stocks with the highest likelihood to outperform the market. And if you like timely stock market topics like this, then please hit that like button as it tells me to record more videos like this in the future. Okay, let's get back to the curious case of SpaceX. The first thing you should know is that the same Norway sovereign fund voted against Elon Musk's historic Tesla pay package, not once, but twice. Now, they clearly have some reservations about what Elon Musk is worth. Yet, they still bought SpaceX. Anyways, that tells you how badly the smart money wants space exposure. And to understand what they're getting exposure to, you need to know what SpaceX actually does. Now, they build and launch rockets. They run the Starlink satellite network. They're the backbone of getting anything to orbit it. And oh, yeah, they toss X, you know, formerly Twitter into the stock as well. Many Wall Street analysts are dreaming big with these shares. That's because they enjoy 19 buy and strong buy recommendations. But it's important to note there's a smattering of booze in the crowd with five holds and one outright sell recommendation. Now, the average target price amongst all these analysts calls for nearly 60% upside in the year ahead. But a lot of those targets were issued right after the IPO came out and shares were trading around 200. So, I kind of called them into question. I want to be clear that the analyst issuing the sell rating says the fair value is about 50% lower than where shares are today. So not everyone has their heads in the stars literally right next ran SpaceX through our Zen ratings qu model which weighs each stock against 115 different fundamental and technical factors. Now the results are then distilled into an intuitive letter grade of A through F. Indeed, you want a portfolio loaded with A-rated stocks. They have historically outperformed the S&P 500 by nearly 3:1. Now, sadly, SpaceX does not meet the threshold for A-rated stocks nor B-rated stocks, right? It is a mere C-rating, right? That sounds kind of middle of the pack, but actually the stock is more like a C minus grade because it currently ranks in the bottom third of all stocks we track. Note that C-rated stocks generally perform only half as well as the S&P 500 going back to 2003. And it is because of these poor results that I often say C means see you later. Beyond the overall Zen rating, we also provide seven underlying component grades that gives us clues on the unique strength and weaknesses of any stocks. Now, when it comes to SpaceX, there is only one standout grade, which is for sentiment in the top 18% of all stocks. This definitely reflects the current Wall Street support. Unfortunately, it's pretty much all downhill from there. Growth and momentum sit around the middle of the pack. Not good, but not bad either, right? But value, financials, and safety all land in the bottom quarter of all the stocks we review. Let's remember that this company burns money like it's going out of style. This means they will need to continue to borrow massively to fund operations. And don't forget that the post IPO lockup is unwinding bit by bit, right? That increases the selling uh of shares that could put more downward pressure on the stock. Now add it all up, you can understand why many investors, including myself, are sitting out the ride on SpaceX. Quick aside before I continue, if you enjoy discovering stocks align with current events like this, then the best thing you can do for yourself right now is to sign up for my next live training session this coming Monday. The focus is on timely market insights, plus my top picks. Now, it's totally free, but you do need to sign up. You can do that now. To join me this coming Monday, just go to wall streetzen.com/live. All right. Before SpaceX went public, its sympathy play was another public company called Rocket Lab with a symbol of RKLB. They're the other company actually putting rockets into orbit. Now, this is not Vaporware. It's an operating launch provider, which is why retail investors consider it a viable option in the space. Just like with SpaceX, Wall Street is mostly bullish on these shares. But let's be honest, my recommendations from Wall Street are kind of a dime a dozen. That's why I have much more faith in what our proven quant ratings model unears from the full 115 fundamental and technical factor review. Rocket Lab scores even lower than SpaceX in the Zen ratings model. They rank in the bottom 17% of all stocks which amounts to a lowly D-rating. This rightfully stands for a sell recommendation. Going back to 2003, these D-rated stocks have lost lost 6.57% annually versus an 11% average gain gain for the S&P 500. That should give everyone a long pause before investing in these shares. Now, there is no point going into the seven component grades because it doesn't get any prettier. However, the Zen ratings are updated daily on Wall Streetzen.com, so potentially prospects for Rocket Lab or SpaceX improve over time. So, be sure to check the Zen ratings for these or any stocks before making any buy, hold, sell decisions. All right, I think you've gotten the idea on how I review these investment opportunities. So, at this point, we're just going to go rapid fire with some of the other space industry pure plays, right? We have uh Space Mobile with a symbol AS. The Zen rating is F, rock bottom. 3% of all stocks analyzed. Truly pitiful fundamental profile. Black Sky Technology, BKSY. It has a Zen rating of D, ranking the bottom 16% of all stocks. And then Intuitive Machines, LU NR, uh, a D again, bottom 12% of all stocks tracked based upon that 115 fundamental factory view. The takeaway is clear. Many of these pure play space stocks are extremely speculative and thus odds of future outperformance are very, very low at this time. Don't get me wrong, each has an awesome growth story and, pardon the pun, sky-high potential, but they are just currently way the heck overpriced given the current realities, which makes it hard to see any upside from here. So, are there any stocks out there with the fundamentals that actually support it in the space industry? Gladly, the answer is yes, and we'll get to two of them in just a moment. But first, if you're finding this video useful, then please hit subscribe. I publish datadriven stock analysis like this every single week, breaking down what the numbers say versus what the headlines want you to believe and this is the best way to see what I publish next. Okay, let's review two bullish opportunities with a strong foothold in the space industry. Starting with a really steady performer in Loheed Martin with a sale of LMT. Now, no doubt you recognize this defense company. What you might not know is they actually have a space division doing $13 billion a year in revenue. Plus, they have attractive fundamentals that greatly add to the appeal of stock ownership. Lockheed builds the Orion capsule and NASA is using to send astronauts back to the moon. Satellites, uh, deep space probes, missile defense system. This is a genuine space business just wrapped inside a defense giant instead of a freshly baked IPO that is more about hype than reality. Lockheed also does something none of the previous stocks mentioned do. It makes real money, like consistent money. All this is proven by the five billion in net income each of the past four years. Finally, we have a stock the Zen ring smiles on. In this case, Loheed earns a zen rating of B, which amounts to a buy recommendation. These stocks have doubled the S&P 500 over the many years. Note that our coveted A ratings are only given to the top 5% all stocks. So, Lockheed is knocking on the door with its top 6% showing, right? So, calling it a B+ or an A minus might be more accurate. Now, let's dial into those component grades to see the strengths and weaknesses here, which starts off with growth in the top 24% of all stocks. Value lands in the top 9%. Next up, we have financials, better still in the top 7%. And safety is the standout grade in the top 6%. Now, put those four together, and you've got the picture that's been missing all video long. Not just healthy growth, but a reasonable valuation, too. That's where the pure plays come up woefully short. All right. Lockheed is a big mature company and grows at a steady clip rather than in a rocket's pace. That's the trade-off. You give up the moonshot for grounded consistency that you can count on. So, Lockheed is the grown-up in the room, but it's not the single highest rated name on my list. And before I show you this stock, I just want to extend to you a little invitation. If you want to stay a step ahead of the market, then join me live every Monday because that's when I share my updated market outlook and trading plan to outperform. It's also where I unveil my trade of the week based upon the proven Zen range quant model and my greater than 40 years of investing experience. It's a free event, but you do need to register. Just go to wall streetzen.com/live or click the link in the description below or scan the QR code in your screen. Just pause the video for a moment to sign up. I can be patient and wait for you and then I look forward to seeing you there on Monday. All right, here's that top rated name I hinted at before and that's Move with the symbol of mog.a. This one is a top-notch A-rated stock. But first, let's talk about what they actually do. Then we will get deep uh into the all the data. Move makes precision motion control components for the actuators that go inside aircraft, defense system, and yes, satellites and launch vehicles. When a rocket steers, when a satellite adjusts, something like Moog's hardware is often doing the work. It's a classic picks and shovels play on the modern gold rush of space exploration. And unlike the pure play space stocks, this is a real profitable business decades old that's been quietly compounding profits and investor wealth over the years. In fact, the stock is up over 130% this past year. So there is no longer completely hidden name that nobody's noticed. The crowd has started to figure it out. The question is whether that upside run can keep on going. Gladly signs point to yes. That's because there is a real growth engine underneath it all. not hype and vaporware like so many of the other names we talked about today. Moog has served up 12 straight earnings beats. That's three years of backto backto back like Michael Jordan and the championship Chicago Bulls, my hometown team, right? And just to be clear, they were big beats too, as you will see in the table of earnings results coming up on your screen. Now, here's the real payoff. This is our first A-rade stock today, which amounts to a strong buy recommendation. That's because they rank in the top 2% of all stocks after doing that full 115 fundamental factor review. Let's remember that A-rated stocks have nearly tripled the S&P 500 going back over 20 years. Looking at the component grades is not hard to see where it earns that elite rating. We're going to start off with growth which is in the top 18% of all stocks. That bodess well for more earnings beats ahead. Safety is top 13%. Financial strength even better in the top 9%. Then we have momentum in the top 4% showing that these have been very timely shares. And the standout right at the summit is sentiment the top 3% of all stocks tracks. This tells you the smart money is already taking a ride on these shares. Now here you have a profile of a quality company. The market is actively waking up to this is what a toprated space play actually looks like. Now one much more likely to fly higher than never get off the launching pad in the first place. All right. Sorry for all the bad puns. So there you have it. Norway's $1.2 billion bet lit up every space stock in sight. However, the obvious peer play names just don't add up when you truly analyze the data. No shame in keeping your eye on them to see if their gen rings improve to A or B territory. Until then, it's best to invest where the odds are better stacked in your favor like Loheed Martin and Moog. Now, I want to hear from you. Even after the analysis, are you still tempted to buy some of those poorly rated peer play space names or are you more swayed to follow the fundamentals into the more stable stocks like lock and mood? Please share your thoughts with our community in the comments section below. And if you want to see which stocks I think could benefit from Musk's big uh recent announcement of the Terrafab, then I strongly suggest you check out the video that's popping up on your screen right